7 Ways Banks Will Limit Your Credit Card Rewards –

Rewards limits

While not a new practice, rewards limits are becoming more prevalent, especially on the cards that promise the highest reward rates. There are four types of stated limits to look out for on your offers:

Annual rewards limits – an example of this would be the Citi Forward card, which limits you to 75,000 ThankYou Points in any given year

Monthly spending limits – The Chase Freedom and Discover More cards use this a lot. Their quarterly 5% cash back bonus promotions are usually capped, so you can only earn the max rewards on a few hundred dollars of spending each month.

Limits on bonus rewards – Only a subtle difference with the above, but some cards cap reward spending on very specific categories. This is a common feature of gas credit cards. Examples include the Costco TrueEarnings Amex, which only pays 3% on up to $3,000 in gas purchases each year.

Indirect limits through shorter expirations – A common feature of frequent flyer miles and other such loyalty programs, sometimes your accumulated rewards might expire after a certain amount of time, implicitly reducing your realizable rewards. For example, Citibank ThankYou Points expire after three years and BofA WorldPoints expire after five.

NOTE: Merchants and consumers pay these reward fees upfront as part of the merchant interchange SwipeFees, yet as you can read above, the banks and credit card companies pay out only a fraction of those prepaid reward fees.

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This entry was posted on Wednesday, September 29th, 2010 at 7:04 pm and is filed under merchant interchange. You can follow any responses to this entry through the RSS 2.0 feed.
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WayTooHigh.com: The Credit Card Interchange Report, is edited by Mitch Goldstone, co-founder of California-based ScanMyPhotos.com, the international online photo preservation service.
Goldstone and co-owner, Carl Berman are also the lead plaintiffs and class representatives in a antitrust class-action litigation against Visa, MasterCard and major banks that was filed in 2005.
This informational web site was created to provide news and commentary updates only. None of the information posted on WayTooHigh.com is intended to constitute legal arguments; it reflects only the opinions of its co-editors and not of any other plaintiffs or other parties involved in the merchant antitrust litigation. The information is not guaranteed to be correct, complete, or current. We make no warranty, express or implied, about the accuracy or reliability of the information posted by WayTooHigh.com or at any other Web site to which this site is linked. (c) 2010